Technology Value Chain

How apps are delivered#

Technologies don’t exist in a vacuum.

In order to deliver apps, you chain tech components together (in a “value chain”) to build them. Some of these, like electricity, are commoditized, meaning they’re cheap and highly available. Others, like cloud services, are productized - cheaper than you can build yourself and not core to your value proposition. Still, others, like a proprietary compression algorithm, are “secret sauce” and must be coded by you.

The law of complements#

One of the most fundamental laws of technology microeconomics is that increases in the supply of one technology drop the unit price of that technology, which then causes the value of related technologies to increase.

Examples#

That’s a lot of words, so let me give some examples:

• One of the most salient driving forces in technology has been Moore’s law, which says computer chip performance (loosely defined) doubles every 18 months for 50 years. Yet, the person to make the most wealth from this trend has been Bill Gates, who wrote the software that runs on this hardware, even if it got worse at a commensurate rate. In fact, a popular variant of Wirth’s Law has christened Gates’ law: “The speed of software halves every 18 months.”
• This is akin to the legendary founding story of Levi’s Jeans; during a gold rush, sell shovels.
• In much the same way, Larry Page and Sergey Brin made the most wealth from the world going online, not the ISPs that helped make it happen.

Commoditize your complement#

Joel Spolsky (and later Gwern Branwen) wrote about this strategy as “Commoditize Your Complement”. This assumes a great deal of agency on your part, which you may not have since you aren’t Google or IBM. However, you see the influence of this law in every huge and aspiring-to-be-huge tech platform - it puts itself at the center of its world and commoditizes all the adjacent technologies that it works with (Often, you hear this as “framework-agnostic,” “language agnostic,” or “You can use ${THING EVERYONE USES} or ${DISTANT SECOND FEW PEOPLE USE} or ${THIRD THING NOBODY USES} with us!”). Fill in the blanks with your favorite platform. If I named names, I’d piss someone off!

Look out for cheaper and easier things#

The overall lesson is this: Look out for things that are rapidly becoming cheaper/easier because adjacent things will become a lot more valuable as a result. As a supplier and creator of technology, you want to be next to the hype.

Wardley maps#

We have established that it is valuable to understand when adjacent parts of a value chain are commoditizing. This happens to closely map to Technology Adoption Curves - the more widely adopted something is, the more commoditized it is.

What if we went two-dimensional? What if we plotted commoditization on an X-axis and closeness to the customer on the Y-axis?

We have just invented Wardley Maps:

At first glance, these can feel like mumbo jumbo, overly complex charts, but they actually make an intuitive model for mapping out an entire ecosystem in the context of all its moving parts. Simon Wardley reframes tech maturity into four stages: genesis, custom, productized, and commoditized, and then vertically arranges tech components by visibility to the end-user.

I didn’t get it at first. It took watching a few talks (1, 2, 3, and more) for it to actually sink in, but hopefully, by introducing Wardley Maps in the context of Technology Adoption Curves and commoditizing complements, I have made the connections for you to understand the value of mapping an ecosystem.

You want to help technology commoditize#

You can maintain a mental map or actually go through the exercise of drawing out the ecosystem you work in, but the implications are clear, you should want to help technology commoditize, and then you should want to work right next to that technology.